Peru

That elusive feel-good factor

Alan García may be a reformed character, but Peruvians are not giving him much credit for that

THE economy is growing at close to 8% a year while inflation is running at under 2%, making for the best overall performance since the 1960s. As he marks the first year of his second term as Peru's president on July 28th, Alan García might reasonably expect to be basking in public acclaim, especially since he has resisted the populist adventurism that marked his first term in the 1980s.

Yet it is not so. Several parts of the country came to a standstill this month, with demonstrations against economic policies, protests by teachers and complaints about life in general. In Apurímac, in the impoverished and mainly Indian southern Andes, thousands of demonstrators used slingshots to hurl stones at police. Thousands more from Ayacucho, another Andean city, marched on Lima, the capital. Elsewhere in the south, protesters took over railway stations, blocked highways and tried to ransack airports. Three were killed before the government yielded to some of their demands.

A poll by Ipsos Apoyo this month found that only 32% of respondents approved of Mr García, down from 63% last August. That makes him one of the least popular presidents in Latin America. What makes this odder is that the benefits of Peru's economic boom are starting to be more widely felt.

The government's statistics agency says that poverty fell by more than four percentage points last year (see chart). In Lima and other coastal areas it fell even more sharply. The problem is that other parts of the country are still missing out. In Apurímac and Ayacucho, poverty rates actually increased by some ten percentage points compared with 2004. In the Apoyo poll, 47% of respondents thought that poverty had worsened over the past year.

When campaigning last year Mr García disparaged a conservative rival as “the candidate of the rich”. His opponents now lob the same charge at him. He has backtracked on some of his campaign promises. Having equivocated on a free-trade agreement with the United States, he now supports it (though there is little sign that the Democrats who control the American Congress will ratify it). He has reneged on a promise to change the labour laws to eliminate widespread subcontracting under which workers have few rights.

This change of heart has reassured business. But it has left the government vulnerable to a demagogic opposition loosely associated with Ollanta Humala, a nationalist former army officer whom Mr García defeated in the election. Some government officials see the hand (or at least the money) of Hugo Chávez, Venezuela's leftist president, who supported Mr Humala last year, in the recent protests.

The government accepts that more needs to be done to spread the benefits of growth. It is transferring around $3.5 billion to local governments this year, for investment in infrastructure, health care and education. Social programmes have been consolidated and streamlined under an umbrella plan to tackle child poverty and malnutrition in the poorest regions. Other programmes are aimed at helping Andean farmers and at safe drinking-water schemes. Officials hope to reduce the overall poverty rate by a further ten percentage points over the remaining four years of Mr García's term.

The problem is that even if such projects are well-executed their effect will be felt only in the medium term. Some Peruvians worry that the street protests will panic Mr García, whose political touch is sometimes erratic, into reviving his latent taste for popular short-term measures that end up doing harm. So far he has been at pains to avoid the mistakes of his previous term, when Peru suffered hyperinflation and economic collapse.

Less clear is what he now stands for. Provided that the economy continues to grow and the president holds his nerve, the protests should start to ebb. Mr García could yet go down in history for having made serious inroads into the poverty of the southern Andes. But the slingshots are not about to be put away just yet.